The asset allocation of balanced funds or hybrid funds are rigid where as that of asset allocation funds are flexible. The OD of asset allocation funds infuse flexibility by giving full freedom to the fund manager or define his freedom by linking the asset allocation to some parameters like market P/E ratio. It helps in surging ahead in a volatile market without each time have to refer to the investor's communication/advertisement in local daily about changes in the fund management policy.FT India PE ratio fund, UTI Variable Investment Plan,Pru ICICI Dynamic Equity Plan etc are examples in this respect.
Templeton has defined asset allocation as <12%>.
UTI has put slabs from 7151 to 9900 levels of BSE Sensex progessively declining equity allocation from 90% to 30%. Here UTI could not capture the growth in BSE Sensex beyond 9900 when the level above 9900 continued more than an year.
Read the full vernacular text in business manorama dated 12th March 2007
Start Early, Proceed Systematically, Look Long Term
Let Your Money Work For You
All You Wanted to know about money
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